BC real estate on 3 month rally
Housing markets tend to run in multi-year cycles, but the Vancouver Sun is reporting that spring sales and prices are up in BC since January:
“[March sales are] actually quite an improvement from what we experienced in the winter months, and really, right now are trending on what we might expect,” said Cameron Muir, chief economist for the B.C. Real Estate Association, in an interview.
Extrapolating March sales out over the rest of the year, Muir said sales will trend at levels somewhere around sales levels experienced during 2000-01.
“That’s what we would expect given a weaker economy [and] rising unemployment.”
From November to January, Muir said sales levels resembled the mid-1980s, which saw much worse economic conditions.
Muir said unemployment levels at the beginning of the current decade were higher than they are today, though “we’re expecting, of course, continued erosion of employment levels over the coming months.”
However, he said the combination of falling prices and interest rates continues to draw buyers back into the market.
Full article at the Vancouver Sun.
Rather than ramble on about spring bounces I’ll just show a picture of the last three years in Sacramento from the Sacramento Land(ing) Blog – the only spring that hasn’t bounced is this one:
April 18th, 2009 at 5:41 pm
JOE,
So what? Their house would have sold at over 800K last year.
Where are going get your info now? Let me guess…a realwhore?
April 18th, 2009 at 3:16 pm
house prices seem to be rising. looked at a house 3 months ago, which was taken of market. Similar home on next street at 30K more this month. pretty distressing.
April 18th, 2009 at 2:56 pm
I feel so stupid.
After having followed this forum quite regularly i told my neighbour in Surrey,that their house would never sell at the 2009 price they put it on the market for last week. Guess what it sold in 2 weeks at asking price of 695,000. SO MUCH FOR THIS VANCOUVER HOUSING CRASH. Pretty pessimestics on my site in my opinion. Wont be reading this info ANY more !!!!
April 17th, 2009 at 2:32 pm
VanBanker:
"Very true, I look forward to rent equivalence as well.
However, what mortgage terms do you compare to rents? 20-35 year am? What size deposit?"
I still think the old standard 25%/25 year will apply. Any time I hear that there's a new paradigm, I'm skeptical. That to me is bubble talk, so when the bubble is over that talk will be over.
April 16th, 2009 at 10:41 pm
Patiently Waiting:
Considering the lowest rate of 3.25 1 year fixed won't be available in a years time let alone two the current payment would be $2000+ p/m. You'd have to be uber stupid to fall for this scam if $999 p/m is why you're buying.
April 16th, 2009 at 9:58 pm
A project on Westwood Plateau called Whitetail Lane is offering 0% mortgages for two years. That's how you buy something for $419K and get $999/month payments.
There are simple-minded fools who will say, "Gee, that's less than my rent."
And what happens at the end of two years…? This ain't no TV set.
April 16th, 2009 at 9:19 pm
Now that the bubble of air has become a bouncing ball, it's going to be hard to keep the ball from its natural tendency to fall back to earth. There are just too many gravitational and frictional forces. Actually, the ball is made of lead, but it is not yet widely known.
April 16th, 2009 at 8:23 pm
“[March sales are] actually quite an improvement from what we experienced in the winter months, and really, right now are trending on what we might expect,” said Cameron Muir, chief economist for the B.C. Real Estate Association, in an interview.
——————
Can't believe he is actually getting paid for burping up this shit.
April 16th, 2009 at 8:13 pm
“Or is majority of our population really fools who have no comprehension of basic math? “
Yes, it is. But that is beside the point.
April 16th, 2009 at 8:07 pm
Anon: "Or is majority of our population really fools who have no comprehension of basic math? "
Not exactly. Most people bought when prices were significantly lower. They choose not to do the math because:
a) they don't need to
b) it won't affect whether they will sell or not
c) if they do and learn the horrible truth, they'll be ostracised at dinner parties. I should know.
April 16th, 2009 at 5:20 pm
Big trouble in paradise. The jumbo Option Arm and Alt-A reaet wave is chewing up the middle class borrowers like a woodchipper. Oh it's coming all right.
Hawaii foreclosures soar 503% in March
Increase in March was 2nd only to North Dakota, which saw 563 percent rise
A decline in property values and continued constriction of home sales have made avoiding foreclosure harder for many people who can't pay or refinance their mortgage in a poor economic climate that has included widespread cuts in wages and jobs.
http://www.honoluluadvertiser.com/article/2009041…
You think that like Vancouver, Hawaii had a never ending supply of rich foreigners, international retirees and investors waiting to snap at every listing. And talk about running out of land….. on an island . Like Vancouver , prices should be going up not down, Hmmmmmmmmmmm….? Is there something wrong with the Vancouver good forever hype? Methinks so.
April 16th, 2009 at 5:07 pm
"Aleks Says:
April 16th, 2009 at 3:25 pm
When current prices are in line with or slightly lower than current rents, that’s when we’ll be able to say fairly confidently that the bottom is in."
Very true, I look forward to rent equivalence as well.
However, what mortgage terms do you compare to rents? 20-35 year am? What size deposit?
April 16th, 2009 at 4:50 pm
Aleks..woops i missed the spirit of your post..my bad
April 16th, 2009 at 4:45 pm
For example, I knew some people who thought prices were too high in 2001 (the bottom of the last cycle)”
no one could have possibly fore-casted the rot and corruption that allowed this housing bubble to form..and i mean no one
sub-crime $0 down and NINJA mortgages were impossible to predict..
anyone remember the california strawberry picker who made $18,000/yr that was given a $800,000 mortgage by countrywide
predict that..
April 16th, 2009 at 3:58 pm
onanimus.
Canadian immigration rules for investors /entrepeneurs are the laughing stock of the global crime community.
Hand over $400000, which you get back after 5 years and you and your extended family are in for the best free health care and education in Western world for life. You just have to run a money laundering nail bar / restaurant etc for a few years and buy a condo or two. Its easier than becoming a realtor. Read the book MacMafia and you'll get the picture and wonder why the gunfire didnt break out sooner.
April 16th, 2009 at 3:46 pm
Aleks:
"There are plenty of economists who believe we’re in a generational bubble caused by the baby boomers"
That's a very good point, I agree that we're in a generational bubble-how many times have your relatives told you "I bought this house in 1970 for $40k and now it's worth $400k" I'm not sure this is a sustainable trend, especially with all boomers set to retire and sell their houses around the same time (or just die, thus sell) and with fewer of us young people around to sell to..doesn't take a genius to see that this housing as an investment idea may have run its course. Of course, I could be wrong and housing will always go up (I'm not just talking about inflation). But it sort of reminds me of the people who are arguing that GM should be bailed out because "it's always provided good jobs for people" Just because things have been a certain way for the past 50 years doesn't mean it will continue indefinitely.
April 16th, 2009 at 3:25 pm
"You should be careful Anon. When you’re waiting for a bottom, you need to discern the difference between a realistic bottom based on history and fundamentals, and what you would LIKE the bottom to be.
For example, I knew some people who thought prices were too high in 2001 (the bottom of the last cycle)"
It's not that simple. There are plenty of economists who believe we're in a generational bubble caused by the baby boomers, in which case 2001 was not the real bottom of the market and extrapolating from it won't tell you anything. Yes, the market could only drop 30%, but it could also go much lower. If you look at business cycles going back more than 50 years, we are indeed due for a depression. If that happens, even 75% may not be the bottom.
What you need to look at is price vs rent at any given point. There's no guarantee that rent won't go down. So even figuring out what a balanced market would be based on today's rents can't predict the bottom, because all the new units plus people moving away to find work adds up to lower rents. When current prices are in line with or slightly lower than current rents, that's when we'll be able to say fairly confidently that the bottom is in.
April 16th, 2009 at 2:45 pm
IMPLOSION !!!!!!!!!!
General Growth Properties files for bankruptcy
By Steve Goldstein & Andria Cheng, MarketWatch
Last update: 2:20 p.m. EDT April 16, 2009Comments: 179NEW YORK (MarketWatch) — After several rounds of waivers from creditors and a long struggle to stay afloat, the nation's second largest mall operator, General Growth Properties, on Thursday filed for bankruptcy protection, saying it couldn't reach an out-of-court consensus on how to restructure its $27 billion of outstanding debt.
The Chicago-based firm, which operates malls in 44 states, was brought low by an aggressive growth and acquisition strategy funded by debt, and is symbolic of the crisis growing in the commercial real estate market.
And the trouble for firms like General Growth are likely to continue, according to the latest report about U.S. economic conditions released this week in th eso-called Beige Book.
"Nonresidential real estate conditions continued to deteriorate over the past six weeks. Demand for office, industrial and retail space continued to fall, " the report said.
"Commercial real estate investment activity weakened further. Contacts said a decline in credit availability and markdowns on commercial property were keeping buyers and sellers on the sidelines," it concluded"
General Growth Properties loses long struggle over excess debt and files for bankruptcy. Shopping centers in 44 states, including Glendale, Calif. (left), could be affected.
• Is this the beginning of a crash in commercial real estate? (First Take)
• Worst to come, says Jim Awad | Housing permits hit record low
• RealtyTrac reports record foreclosures in March
• 15-year mortgage, 5-year ARM fall to record lows
http://www.marketwatch.com/
April 16th, 2009 at 2:42 pm
onanimus: I remember another city that was supposed to be different because of all the drug money and wealthy foreigners that wanted to live there.
It's called Miami and it's suffered one of the biggest US market crashes.
The bigger the hype the harder the bust.
April 16th, 2009 at 2:22 pm
Great news ! Only 610,000 seasonably adjusted jobs were lost this past WEEK !
In jobs data, initial claims dropped by 53,000 to a seasonally adjusted 610,000 in the week ended April 11, the fewest total claims seen for a week since Jan. 24, the Labor Department reported. See Economic Report.
Sweep aside the 'adjustment, the U6 and the hedonics and it's probably closer to a million.
April 16th, 2009 at 2:09 pm
Copied from Garths blog.
PS: Good read for SB
The Canadian Real Estate Association must be stretching it now. They compare March 09 sales to February 09 sales. Of course the numbers are up as they always are. And April should be better than March. What a scam! Just look at TREB stats on http://www.torontorealestateboard.com/consumer_in…
Here is tell the real truth about numbers. The percentage of sales relative to total listing inventory is the real picture. Example from TREB: 2008 sales were 74,552 on 162168 listings availabe. Thats about 45% down from about 57% in 2007when they posted 93,193 sales. Unfortunately they do not like to track inventory very well. When you see their chart of past years this can show you what can happen… example 1990 (last recession) sales 26778 and listings 94480 (28.3%) average price $254,490. The word of the day was “stay alive til 95″. By 1995 sales had improved to 39273 with 81767 listings (48%) average price $203,028!!!
So I am calling it here. Based on the current trend for TREB numbers the spread between supply and demand is widening and will likely be closer to 35% by the end of this year which can only mean lower prices ahead"
April 16th, 2009 at 2:03 pm
Cash holders, better get in before the rally continues.
April 16th, 2009 at 1:55 pm
Recent Stats out
http://www.nvcondos.ca/listings?pathway=127&p…
April 16th, 2009 at 1:47 pm
Strataman:
You own a farm outside and rent in the city.
Could you elaborate more, please. I'm curious.
Realpaul,
Cool posts, as always!
Regards
arit
April 16th, 2009 at 1:47 pm
VanBanker:
#17 VB, it's hard to say isn't it? The total % decline may take everyone by surprise depending on the extent and duration of the recession. I have to give the MSM full props for sliding the spin away from reality and that has the sheeple unaware of the bigger picture. But…like your friends who capitualted at the top and the bottom it is so typical of the effect of propaganda. It often has people falsely convinced to buy at exactly the wrong time due to the emotion a good ad campaign can generate. Sad but true.
Frankly, I don't want to hazard a guess at what level the market Will fall to. We know that 10 X's income is simply way too high. Fundamentally the market has room to fall a full 75%, no doubt.
I guess the gap that will follow will be dependant on the state of unemployment and the general economy. It is way too early to call a bottom on the recession and a lot of bad news has yet to be priced into the market. A few ethnics are not enough to hold up the entire market and as we know the government is playing Russian roulette with % rates. The recession is building not waning, unemployment and buisness failures are becoming more and more obvious. I see new 'black holes' in just about every commercial area I have gone too recently and the trend seems to be accelerating. It's not a good time to be selling furniture or appliances obviously.
In the 70's and 80's the recession wasn't manifest overnight. It took a couple of years before it was obvious to everyone. That day is coming and will start to make to the front page once the majority of the current unemployed have seen thier EI cheques stop coming in. I think thats going to be the point where things get really ugly. Given that the major layoffs started in December it should be this fall , probably Sept or so, when the lines at the food bank spill over onto Main Street.
April 16th, 2009 at 1:32 pm
Digging deeper into the bankruptcy numbers I see that we are actually # 2. BC personal bankruptcies are up 47% while Alberta is #1 at + 73% .
The national stats as always failed to represent reality.
April 16th, 2009 at 1:26 pm
Woodenhorse:
Thanks, woodenhorse; the waitresses at Shark Club somehow meke doing field work much less burdensome than it otherwise would be..
April 16th, 2009 at 12:49 pm
http://www.beyondrobson.com/news/2009/04/woodward…
April 16th, 2009 at 12:39 pm
RBC report on affordability just out … little different that Dave's calculation (o.k. a LOT different!).
April 16th, 2009 at 12:37 pm
"Anon Says:
April 16th, 2009 at 10:48 am
This bounce is nuts. Price levels have to correct at least by 50%, or even more like 75%. It simply does not make any sense to live in Vancouver otherwise!"
You should be careful Anon. When you're waiting for a bottom, you need to discern the difference between a realistic bottom based on history and fundamentals, and what you would LIKE the bottom to be.
For example, I knew some people who thought prices were too high in 2001 (the bottom of the last cycle) so they waited until 2007 and bought a shoebox condo at near-peak prices because they finally capitulated and thought prices would go up forever. They couldn't reconcile the difference between: the top or bottom of a cycle; and what they subjectively felt was too expensive.
If you're expecting a 75% drop, you may wait forever. Personally, I'm waiting for the bottom of this cycle, which I'm guessing will be about a 35-40% decrease from today's benchmark price, bottoming around $400,000 plus or minus (which is about 47% from peak I believe).
April 16th, 2009 at 12:36 pm
#15:
"the biggest rip-off on the face of this planet"
Maybe not the biggest, but pretty close…
P.S. Anon the stock trader- pick your own name!
April 16th, 2009 at 12:25 pm
There is hardly anything to be confused about.
This city is supported by drugs, porn and foreign blood money.
Everything is relative, even our insane RE prices.
The "other" guys can afford multi-million dollar condos, really, really expensive cars, choice education for their children and designer outfits for their wifes. And yet still they blow thousands of dollars daily in our casinos without as much as a blink of an eye.
For all that, as a bonus, they get free health care for their elderly parents and sometimes immunity from their own governments who put a price on their heads.
The rest of us are simply a modern day cannon fodder. We are actually working, paying taxes and to make ourselves feel good about our lives we buy some cheap consumer crap once in a while (like lcd tvs and blu-ray players). On credit, that is…
Bad guys always win, simply because they have bigger guns.
The only reason I live here is that I can ride a motorcycle in February. Otherwise this place has to be the biggest rip-off on the face of this planet.
April 16th, 2009 at 12:23 pm
As a stock trader most of my life, I can tell you that the only time people bid UP an asset is when they think they can sell it at a higher price.
BC home prices are JUST reversing off their peak and setting a downward trend. Using my stock-trading experience, I don't buy anything at this stage. Prices almost always go further down and creates a floor before it stages a powerful rally (hopefully). But now is definitely NOT a time to buy. No thanks!
April 16th, 2009 at 12:11 pm
I love that chart, it's a great reminder that you can have short-term rallies even when the overall trend is overwhelmingly down.
April 16th, 2009 at 12:06 pm
The link might be useful
http://www.nfb.ca/film/Neighbours_Voisins/
April 16th, 2009 at 12:05 pm
Strataman: Strataman: Have you ever seen this NFB film called "Neighbours"? Enjoy….
April 16th, 2009 at 12:05 pm
Chink mentality is vastly different than white and other races but is very close to East Indian's mindset. I am a Chink so I can tell you Chink is a different entity than other culture.
April 16th, 2009 at 11:57 am
What I am really confused about is why Vancouver population so gladly throws their after tax incomes away by paying these ridiculous prices for real estate. I just don't understand what an individual must be thinking to deprive himself/herself of any disposable income. Or is majority of our population really fools who have no comprehension of basic math?
April 16th, 2009 at 11:49 am
. Vancouver RE is well supported by Chink population who put RE value more than their lives and children. They would choose starvation instead to save money in hoarding RE during their miserable and thrifty lifespan. Believe me Van RE is the exemption because Chink factor is main reason for Van RE’s astronomical level for this cloudy and rainy city;
if it weren’t Chink power such level would never happen.
April 16th, 2009 at 11:41 am
The chart is a good representation of classic " suckers rallies". It also shows that the adage " a trend in motion will stay in motion until it actually changes" is still a truism to successful investing. The 'bottom fishing' or 'vulture' buyers are gambling. It has been proven that the secret desire of every confirmed gambler is to lose.
We have developed a signifigant population of Asian buyers buyers here in Vancouver. But you have to remember that these people are really fish out of water when they come here. They are bringing thier experiances from distant markets with them that most times have no relation to the local buisness cycle. This is one of the reasons we have such a high ratio of buisness failures amongst this group.
The real estate market in Hong Kong for example as represented on a graph shows short sharp spikes, each cycle lasting 6 to 12 months over a multi year span. Reason? The population density in Hong Kong means many more customers per sq ft. Vancouver has a low population density by comparison ( to any Asian city) and the buisness cycle looks more similar to a long drawn out wave which builds slowly over many years and then recedes at an equally glacial pace. The real estate cycle in Vancouvers version of boom and bust is something like 5 to 7 years up with a 9 to 18 month peak and then downcycling for 5 to 7 years with a 12 to 18 month trough.
The two signifigant modifiers ( immigrant pop and manipulated % rates) have skewed the market cycle but have not eliminated it. The market is doing everything it can to adjust. It wants to go down by the look of the current data, and go down it shall by the look of the collective data stream. Like the Weimar republic hyperinflation storied example, prices are unsustainable. Bread simply doesn't sell at a million dollars a loaf, even though there were photographs of some people wheelbarrowing paper currency around, the fact is that the majority of people had to opt out of that market and it collapsed. Condo's which don't support life at 10 X's average income ( pretty much the highest in N. AM at this point) cannot sustain themselves no matter what the realwhores would have you believe.
So, the bankruptcy stats are out this morning. They show only a snippet of those people who are underwater, using thier last savings, trying desperatly to sell, can't rent and have to subsidize, can't refinance and all the others who find themselves locked into a financial nightmare so ugly that a cheap pizza once a week would seem like a luxury if they could afford it. Lots of stories out there of people who have had to put the car on blocks, taken the kids out of sports, taken a second job etc etc etc. The bankruptcy stats are just the tip of the ice berg.
In spite of the manipulation from any skewing factor over the past 5 years the market is insisting that it gets back to a natural event cycle. That fact is glaringly obvious no matter how it's spun.
On Bankruptcy
http://business.theglobeandmail.com/servlet/story…
April 16th, 2009 at 10:48 am
This bounce is nuts. Price levels have to correct at least by 50%, or even more like 75%. It simply does not make any sense to live in Vancouver otherwise!
April 16th, 2009 at 10:41 am
oneangryslav: your tireless dedication to field work is commendable.
April 16th, 2009 at 10:39 am
Off topic but really true!
http://www.theglobeandmail.com/servlet/story/RTGA…
Why I rent in the city and own an acreage with my nearest neighbor 15 KM's away!
April 16th, 2009 at 10:34 am
Another economy-related data point via anecdote:
I was talking to my taxi driver this morning (a gentleman who had emigrated from Pakistan a couple of decades ago) and he claims that while he used to finish his shift at about 3:00 in the afternoon, he's now leaving early as there is no business.
He's very worried about the next couple of years and how he's going to pay his bills.
Additionally, he has cousins driving cabs in NYC and business is down so much for them that they can't send any money home to Pakistan, whereas up until about a year ago they'd been sending hundreds of dollars a month.
Cab drivers, in my opinion, are one of the canaries in the coal mine of the economy. They're almost like Dean Witter: "when they talk, people [should] listen."
On a related note, I was at the Shark Club on Robson last night to have some beers with friends and watch the Canucks playoff game. I was anticipating a packed house, but the place was relatively dead. For the sake of comparison, I'll be heading down there again on Friday evening.
April 16th, 2009 at 9:02 am
i like the "spring ledge" aspect of course leading to a "summer cliff" but time will tell
April 16th, 2009 at 8:59 am
Damn it. We're only number 3 in bankruptcies for February in numerical terms. Maybe as a percentage of population we're number 1.
"British Columbia recorded 1,140 bankruptcies and proposals in February, an increase of 45.8 per cent from a year earlier and 19 per cent from January."